Baidu, China Internet search and AI giant, has agreed to pay $3.6 billion in cash for the Chinese live-streaming business of JOYY. The deal may help Baidu catch up in the fast-growing live and short video sectors, where it trails TikTok-owner Bytedance and social media leader Tencent.
Driven by changes in consumer behavior that were accelerated by the coronavirus pandemic, Baidu earlier this year confirmed plans to grow its existing short content streaming activities based around the app called Haokan. Baidu is also the majority owner of perennially loss-making generalist streaming platform iQIYI.
“This transaction will catapult Baidu into a leading platform for live streaming and diversify our revenue source.” said Robin Li, co-founder and CEO of Baidu in a filing.
The assets include the YY mobile app, YY.com website and PC YY. The deal is expected to be completed in the first half of 2021.
“YY Live comes to Baidu bringing great synergy. YY Live stands to benefit from Baidu’s large traffic and thriving mobile ecosystem, while Baidu will receive immediate operational experience and know-how for large-scale video-based social media development, as well as an enviable creator network that will further strengthen Baidu’s massive content provider network. Together with the team from YY Live, Baidu hopes to explore the next-generation livestreaming and video-based social media that can expand beyond entertainment into the diversified verticals on Baidu platform.”
Listed on the NASDAQ stock exchange, JOYY is a China-based company that currently enjoys more than 90% of its revenue overseas. Among its assets is Singapore-based short video site Bigo. The sale of its YY business in China, is expected to allow JOYY to invest further in the international businesses.
Live video has become hugely popular in China for gaming and for e-commerce. Live-streaming leaders in China include Bytedance’s Douyin and the soon to be merged Huya and DouYu, which have U.S. share listings but fall under the Tencent umbrella. Others in the streaming entertainment field include U.S.-listed Bilibili and Kuaishou, which recently announced plans for a Hong Kong IPO.
Baidu Tuesday posted its third quarter financial results. These showed little changed revenue of RMB 28.2 billion ($4.16 billion) and a return to profitability. Net profit was RMB13.7 billion ($2.02 billion) in the three months to September.
“Our team executed in the third quarter with top line growth, resilient profitability and strong cash flow, a testament to the durability of Baidu’s business, despite China experiencing a second wave of COVID-19 in July,” said Herman Yu, CFO of Baidu.